Renault Has Cleared The Decks; Will Benefit From New Products
“Core Renault is in better shape than most of its peers in Europe”
While investment banks queued up to bad-mouth loss-making European mass car manufacturers (excluding the Germans of course), Renault of France basked in a rare bit of glory.
According to UBS Investment Research and to a lesser extent Deutsche Bank, Renault is entering a positive phase. Last month, investment bank Credit Suisse described Renault as being “almost German”.
“Core Renault is in better shape than most of its peers in Europe,” said UBS analyst Philippe Houchois.
Deutsche Bank analyst Gaetan Toulemonde said that operating margins could stay positive in 2012 despite a weakening sales climate in Europe, thanks to the new Clio, and the ramp up off capacity in Brazil, Morocco, India and Russia. Toulemonde also believed that Renault’s huge investment in electric cars might at least have some payback in terms of the company’s image, and the potential increase in showroom traffic that might bring.
UBS’s Houchois agreed and pointed to the loose alliance with Daimler as another positive.
“After 10 stagnant years, Renault looks set to grow again across its markets, driven by product and new emerging market capacity. Capex/R&D has been reined in, and stepping up cooperation with Nissan and Daimler, the latter showing that much can be done without a large stake,” Houchois said.
Daimler and Renault/Nissan have mutual stakes of three per cent, and co-operate on joint development and production of small cars, engines and vans.
Better than peers
“Renault appears better restructured than most of its peers with Europe operating above break-even versus losses of between €500 and €800 million for peers GM, Fiat and Peugeot-Citroen or worsening to €450 million at Ford. We believe Renault is benefitting from significant earlier restructuring, higher than average exposure to LCVs and continued growth in low cost/high margin segments,” Houchois said.
Renault unveiled the Dacia Lodgy MPV at the Geneva car show, which will be built in Morocco.
“Renault is set to deliver above industry growth in 2013-2016,” he said.
Renault growth will be based on:
- Core Renault with Clio from the second half of 2012, Twingo, and renewal of upper segments from 2014.
- Electric vehicles from second half 2012
- Low cost platform rationalisation/expansion starting in second half 2012 and new market expansion.
“We estimate Renault operated around break-even in Europe last year, which is much better than most peers. We no longer forecast an operating loss for 2012, although the first half could post a small loss,” Houchois said.
Neil Winton – March 18, 2012